Higher costs, lower payments, tighter credit working against area farmers
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Jack Keizer smiles in the calf barn of his farm on County Highway M in Darien Township. In addition to dairy cows and crops, Keizer and his family run a gravel pit and a disposal business. Keizer says diversification has helped him weather the financial ups and downs of farming. Dan Plutchak/staff.
DELAVAN — For many farmers, 2009 was the perfect storm. A combination of factors — a drop in milk prices, an increase in feed, seed and supply prices, fall weather that wreaked havoc on harvests and a depressed economy — all created one of the most difficult years in decades for those in agriculture.
Net farm income fell to an estimated $1.1 billion in Wisconsin last year, a drop of 56 percent and the lowest level since 2002, according to the 2010 Status of Wisconsin Agriculture report by University of Wisconsin-Madison agricultural economists released earlier this year.
“We are on a streak of low dairy commodity prices, including the price of milk — and that’s been going on for 18 months,” said Amber Bennett, senior vice president of Badgerland Financial in Janesville, a cooperative agency that handles farm loans.
Still, area producers are hanging on.
“I think you’ve got to weather the storm,” said Derrick Papcke, a Sugar Creek Township dairy farmer who milks about 120 cows.
He hasn’t heard of any area farmers going out of business, but thinks many are being particularly cautious these days.
“Everybody’s being pretty tight with everything, watching every dime,” Papcke said.
Dairy farmers were hit especially hard last year, with milk prices dropping to a low of $10.18 per hundredweight in the first quarter of 2009.
But farming is big business these days, and being diversified helps; if a farmer loses money in milk revenue, he may make up for it in beef cattle sales — or even garbage. Jack Keizer, who milks about 110 cows, raises hay, corn and vegetables on his Darien Township farm, and runs two separate operations — a gravel pit and a disposal business.
“We’re a little different from many farmers since we have three sources of revenue,” said Keizer, who started farming for his father at 16.
If he would have relied on milk income alone in 2009, he said, he would have been in trouble.
Others are finding it more difficult to weather the economic storm.
Peg Reedy, agricultural agent for the University of Wisconsin-Extension office in Walworth County, said the volume of calls her department receives has quadrupled, and she’s seeing an increase in requests for financial counseling.
“Early in the year, we started learning about private lenders tightening up credit and starting to turn farmers down for operation loans in the spring,” Reedy said. “A lot of equity has been eroded away; the equity they would use when they applied for loans was gone.”
Read the full story in the May 16, 2010 e-edition of Walworth County Sunday, HERE.